Considering employing someone in the Philippines? To do that compliantly, an employer has a lot of obligations they have to fulfil. One comprehensive and important topic is the set of local employee rights a worker residing in the Philippines is entitled to.
Below is a guide to employee rights in the Philippines to help you understand what you need to comply with. (You can read about employee rights in Australia, Brazil, Canada, Croatia, Ireland, France, the UK, Portugal, Poland, Germany, The Netherlands, Lithuania, and New Zealand).
To employ someone in the Philippines, you need to be a registered employer. Alternatively, you can work with an Employer of Record, such as Boundless, which will employ the worker on your behalf locally. That would spare you any registrations and ensure compliance with employment and tax law, all the while assuring harmonised experience for your employees there.
Regardless of the employment approach, all employees in the Philippines are entitled to the following employee rights.
In the Philippines, employment contracts do not need to be written in order to prove employment. However, it is recommended to provide workers with written employment contracts stating the terms and conditions of employment in local language and the salary in Philippine pesos.
Employers and employees have the freedom to establish the terms and conditions of the employment, with no law stating what terms need to be included. The terms and conditions should be made in good faith and can never be lower than what is statutory by the Labor Code. Statutory labour standards are always deemed to be written into all employment contracts. Any terms or conditions that violate the applicable labour standards are null and void.
A standard employment contract includes the following:
Workers employed for more than a month in all roles except senior and managerial positions, commission-based positions, or fixed-term contracts are entitled to one additional month’s base salary annually, excluding any allowances and benefits (unless they are treated as part of the basic salary). Employers can choose to pay it in two instalments, one in May and one in December, or to pay it in full before 24th of December.
Employees who have not worked the full calendar year are entitled to a pro-rata equivalent of the 13th month salary. Employees who are terminated throughout the calendar year are also entitled to a pro-rata equivalent of the bonus based on how many months they worked during the year.
Casual employees who perform work that is not usually necessary or primarily related to the company’s business become permanent employees of the company after one year of working for the company, whether continuously or not.
Similarly, employees working past their probationary period also have their contracts automatically converted into regular employment.
Every employee is entitled to receiving their payslip that breaks down the information about the amount that is being paid, worked hours, and deductions. Payslips can be issued as a hard or digital copy. The following information needs to be stated on every payslip:
Employers must follow the requirements imposed by the Occupational Safety and Health Standards and provide employees with a hazardous-free environment and working conditions. Employees must receive job safety instructions and get familiar with the environment and any hazards they may be exposed to. Employers have different types of obligations to employees regarding health and safety, depending on the number of staff employed and the type of work and workplace, as follows:
More than 50 but less than 200 employees:
More than 200 but less than 300 employees:
More than 300 employees:
Employers are exempt from providing an emergency hospital or dental clinic in the workplace where all of the following factors apply:
Employees have the right not to be discriminated against at the workplace during the recruitment process and selection for promotions as well as upon termination. It is the employer’s responsibility to make sure employees are being respected in the workplace and not discriminated on the following grounds:
There are also several laws and regulations in place, which prohibit discrimination against the actual, perceived, or suspected HIV status; indigenous people; single parents; and persons with tuberculosis and hepatitis B.
The government has created a comprehensive woman’s rights law known as the Magna Carta of Women (Republic Act No. 9710) to eliminate all forms of discrimination against women and ensure equality between men and women in all sectors of life, including the workplace. The Labor Code prohibits discrimination against a female employee with respect to the terms and conditions of employment solely on the basis of her sex (e.g., paying a woman less than a male colleague for doing the same job, or favouring a male employee for promotions, training opportunities, or scholarship grants).
It further prohibits discriminating, or otherwise prejudicing, a female employee merely by reason of her marriage. Companies found guilty of committing discrimination against women will be penalised as recommended by the Commission on Human Rights to the Civil Service Commission and the Department of the Interior and Local Government. The exact amount of the penalty is determined on a case-by-case basis.
The law (Republic Act No. 7277) guarantees equal opportunity and full participation for individuals with disabilities in regards to employment. Qualified disabled employees are entitled to the same terms and conditions of employment, compensation, privileges, benefits, fringe benefits, incentives or allowances as any other employee.
Employees have the right to be protected from any type of physical, psychological, and sexual harassment in the workplace, while employers have the obligation to ensure the safety of their employees, including taking steps to prevent and address harassment.
Work-related sexual harassment is defined as when someone in the workplace demands, requests, or otherwise requires any sexual favour from an employee, regardless if the employee accepts it or not. Employers have the duty to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement, or prosecution of such acts. Employers must also do the following:
The Data Privacy Act regulates the collection, processing, retention and transfer of personal information of all individuals, including employees, whenever any sort of personal information is included on the data. It also establishes the rights and obligations for data subjects and for those collecting and processing personal data. Every individual having their personal information gathered have the right to be informed about their information being processed and notified on the entry of their personal information into the processing system.
Those processing data must, upon demand, provide individuals with reasonable access to matters regarding the data subject’s personal information and correct any inaccuracy or error pointed out by the individual regarding their personal information. In case of information being incomplete, false, out of date, accessed without authorisation or no longer serving its purpose, individuals have the right to request the removal and destruction of the data. If an individual sustains damages as a result of incorrect information, they are entitled to be indemnified.
Employers have the following data protection obligations:
In case of a full merger in which there is no express stipulation in the articles of the merger concerning the employees of the entity that does not survive, the employment contracts of the non-surviving entity are automatically assumed by the surviving corporation. Thus, the absorbed employees become regular employees of the surviving corporation on the day the Securities and Exchange Commission approves of the merger.
In transactions involving the acquisition of assets of an ongoing concern, provided that the sale is in good faith, the transferee or buyer has no legal duty to absorb the employees of the seller. An innocent transferee that acquires a business in good faith has no liability in regards to the employees of the transferor and does not have to continue employing them. However, in exercising its prerogative to select and hire employees to fill the vacancies in its facilities, the transferee may give preference to the qualified separated employees.
Although there is no law specifically protecting whistleblowers, the Labour Code prohibits discrimination against any employee who has filed a complaint or a proceeding against their employer. It is unlawful for an employer to also refuse to pay or reduce the wages and benefits of, or dismiss, or in any manner discriminate against any employee who has testified in a proceeding against the employer.
Employees whose employment has been terminated due to one of the Labor Code’s recognised reasons or illness are entitled to severance pay. Employees who resign or who are dismissed for just cause are not entitled to this benefit.
Separation pay differs in value depending on the reason for termination, as follows:
Employees who reach the retirement age of 60-65 and who have worked for the same employer for a minimum of five years are entitled to retirement pay, which is equivalent to 22.5 days per year of employment to at least half a month’s salary for every year of employment (with a fraction of at least six months being considered one whole year), paid by the employer.
The retirement pay includes:
Employees younger than 60 years of age are entitled to the government’s employee compensation program, which requires companies to register employees with the State Insurance Fund (SIF). The compensation package is provided to employees in the event of work-related sickness, injury, disability leading to the loss of income or death.
Employees who are dismissed through no fault of their own — that is, due to an authorized cause — are entitled to the unemployment benefit from the Social Security System (SSS). Employees who resign or are dismissed for just cause are not entitled to the benefit.
To qualify, the individual must not be over the age of 60 at the time of dismissal (those older may claim their pension if they are qualified) and must have made at least 36 months of contributions to the Social Security System. Twelve of those months should be in the 18-month period immediately preceding the month of involuntary separation. The benefit fund is a one-time payment equivalent to 50% of the employee’s average monthly salary credit (AMSC) for two months, capped at PHP 20,000.
Employers are prohibited from eliminating or cutting back on employee benefits once they have offered them. Conversely, benefits may be reduced for as long as the consent of the covered employees is obtained. Companies cannot unilaterally revoke benefits that they have voluntarily given to employees. The benefit must meet the following criteria for this non-diminution right to apply:
Every permanent employee (also known as regular employee) has the right to security of tenure, which gives them protection from being dismissed by their employers without a just or authorised reason and without following the correct grievance procedure.
In the case of fixed-term or project-based contracts, the employees are entitled to job security for the duration of the agreed period or project they were hired for. Probationary employees also have the right to limited security of tenure, which includes termination for failing to meet the standards for regularization of employment made known at the beginning of the engagement.
Employees have the right to challenge the legality of their dismissal before the National Labor Relations Commission (NLRC). Employees who are deemed to have been unfairly dismissed are entitled to an indemnity sum of up to PHP 30,000 in just cause terminations and of up to PHP 50,000 in authorised causes dismissals paid by the employer, plus full back pay, reinstatement with all previous benefits and seniority or, in lieu of reinstatement, a separation pay of one month’s wage for every year of service. Employees may also be entitled to moral damages and attorney’s fees.
Employees have the right to self-organise; strike in accordance with the law; and to form, join, or assist labour unions for purposes of collective bargaining. However, managerial and confidential employees are not allowed to be associated with unions, while supervisory employees are not eligible for membership in the collective bargaining of regular (rank-and-file) employees.
Labour unions are regulated, must be registered with the Department of Labour and Employment (“DOLE”) to be recognised, and are not allowed to restrain or coerce employees in the exercise of their right to self-organisation, causing or attempting to cause an employer to discriminate against an employee and asking for or accepting negotiation fees from the employer as part of the settlement of any issue in collective bargaining.
The Labor Code also allows the formation of labour-management councils in private companies to provide a venue for labour and management representatives to discuss company and personnel policies.
Adhering to employment law and employee rights in the Philippines will require a commitment to learning and working with a lot of local regulations. We are here to help you on that journey and take the time to make sense of complex legislative information, which we turn into easy to understand resources and comprehensive country guides.
However, staying on top of Philippine employment law may not be a top priority for you right now. That doesn’t mean you should give up on employing your next remote worker out of the Philippines or opt for hiring them as an independent contractor instead (which is a bad idea).
Boundless can help you employ anyone in the Philippines legally and hassle-free. Through the Employer of Record model, we act as the legal employer to your remote workers and take care of the many obligations that come with adhering to these employee rights in the Philippines. Learn more.
